Foreclosure occurs when borrowers do not pay the mortgage on a home they own, and their lending institution (normally, a bank) requires a sale of the residential or commercial property to cover the debt owed. A rental residential or commercial property foreclosure is a legal action versus the owner of the residential or commercial property. The bank that is owed the mortgage, or a specific or business can acquire the residential or commercial property in foreclosure.

Tenants might not know that a foreclosure has actually been filed on the residential or commercial property they are renting. Even if they discover that an ownership modification is occurring because of a foreclosure, occupants may get lost in the legal shuffle and not know how to pay rent or who to call when there's a repair issue, which can put their housing at danger. The federal Protecting Tenants at Foreclosure Act (PFTA) was enacted to assist safeguard tenants in this scenario.

When Does the PFTA Apply?

The PFTA applies to the majority of tenants when their property owners face foreclosure. The PFTA uses to all houses, consisting of single systems and multi-unit residential or commercial properties, and or commercial properties. And the law uses to renters with any kind of occupancy.

The PTFA does NOT apply to an occupant if:

- the renter is the individual whose name is on the mortgage (this is unusual, a lease is different than the mortgage).

• the tenant is the spouse, parent, or child of the person whose name is on the mortgage.
• the rental agreement is not the outcome of an arm's length transaction (example: the renter and proprietor had a personal, financial, or organization relationship prior to participating in the lease).
• the rent is well listed below market rate, unless the rent is minimized since it is subsidized
  
  How Do You Figure Out if a Foreclosure is Happening?
  
  Below are three alternatives for learning more information about whether a foreclosure has actually been filed on the residential or commercial property you are residing in.
  
  1. Call your county Register of Deeds.
• Use the Wisconsin Court's public online records (CCAP). Find out the legal name of the person or entity that owns the residential or commercial property. Your lease might have the appropriate name of the individual who owns it, but another way to find out the legal name of the titleholder is to browse on your city assessor's office/online lookup. Use that info to browse on CCAP. Click "I concur" and then plug in either the individual name of the owner (under "party name") or business name of the organization that owns the residential or commercial property (under "service name"). The city assessor's website has different ways to determine the residential or commercial property (parcel number, legal description, street address), so utilize the assessor's details to comb through all that while considering what might be on CCAP.
• Go to the Register of Deeds workplace at the City-County Building in Room 110, 210 Martin Luther King Jr. Blvd. Madison, WI. Staff should be able to assist you identify if the residential or commercial property is in foreclosure.
• The constable keeps records for upcoming sales on this page.
  
  What Are My Rights as an Occupant After a Foreclosure?
  
  The PFTA requires the brand-new owner (the owner who buys the residential or commercial property in the foreclosure) to offer the occupant with a minimum of 90 days' notification before requiring the occupant to vacate, or, if the lease term extends beyond 90 days, enable the renter to stay in the unit for the lease term.
  
  If the brand-new owner will be residing in the residential or commercial property, the new owner can terminate the lease with 90 days' notice even if the lease term extends beyond 90 days.
  
  Tenants with an Area 8 Housing Choice Voucher have additional rights under the PFTA. They may be able to remain in the unit under the existing lease and the new owner is required to continue the housing assistance payment agreement. Transfer of ownership after a foreclosure is bad cause for ending a Section 8 lease.
  
  Foreclosure is not a valid reason for evicting a renter. But a renter can be forced out if they do not pay rent or abide by the other requirements under the lease.
  
  The property owner continues to be accountable for repairs till the residential or commercial property is sold in the foreclosure. Once offered, the new owner needs to is accountable for repair work and gathering rent. Within 10 days of becoming the new owner, the new owner should provide to the occupant, in composing, the name and address of the person responsible for gathering rent and making repair work.
  
  Do I Still Need to Pay Rent?
  
  Yes. If renters stop paying their lease on time while their property manager is facing foreclosure or after the foreclosure, the initial or brand-new owner might submit an eviction.
  
  Do I Pay Rent to My Landlord or the Bank?
  
  Tenants are obligated to pay lease to the legal owner of their residential or commercial property unless a court has actually stated that the tenant should pay rent to another person (for instance, a "receiver"). Tenants are accountable for knowing who this is and paying lease to the ideal individual. The simplest method for a renter to identify a residential or commercial property's existing owner is to call their city assessor.
  
  If there's a disagreement in between the bank and proprietor or you are uncertain who to pay, you can write a letter to everyone involved, consisting of the judge in charge of the foreclosure case, informing them how you are paying rent (or detail your attempts to pay rent) and to who, and why. You must consist of copies of any crucial files and keep a copy.
  
  If you are unable to get in touch with the owner who you believe you ought to be paying rent to, make sure to include that information in the letter and keep the lease owed in an account so that it can be paid completely when the owner or the court offers you the info on how to pay rent.
  
  After Foreclosure, How Will I Know Who My New Landlord Is?
  
  In Wisconsin, when a rental residential or commercial property modifications owners, the new owner has 10 days to notify renters in writing of the names and addresses of the individuals who will gather rent and are accountable for repairs and maintenance of the residential or commercial property. Wis. Stat. 704.09( 3 ), ATCP 134.04( 1 )( b).
  
  If your property owner is foreclosed on, you will receive this letter after the "date of verification sale." This is the term for the date when the sale of a residential or commercial property in foreclosure is made final in court.
  
  Can I Use My Security Deposit for Last Month's Rent?
  
  No, not unless you and your proprietor enter into a composed contract that permits you to utilize your down payment for the last month's lease. If you do not have a written arrangement and withhold your last month's rent, the proprietor might submit an expulsion action versus you.
  
  When you move out, the person who lawfully owns the residential or commercial property must follow all the laws about security deposits even if they didn't collect this cash from the old owner.
  
  Can I Be Evicted During a Foreclosure?
  
  While your property owner's foreclosure isn't a legitimate factor to evict you, you can still be forced out for non-payment of lease or breaking your lease.
  
  Can I Move Before the Lease Ends or Stay in the Unit After the Foreclosure?
  
  If you wish to move before the 90-day duration ends or before your lease ends, you can contact your proprietor and ask if they will get in into a composed arrangement to mutually terminate the lease early. Similarly, if you wish to remain in the system after the 90-day duration or your lease ends, you can call the new owner to inquire about a renewal of your lease.
  
  Can the Sheriff Force Me to Leave When I Haven't Received Any Notices?
  
  After a residential or commercial property in foreclosure is offered, the court may not know that tenants are residing in the foreclosed residential or commercial property, and the proprietor doesn't offer the renter any notification when they require them to leave the residential or commercial property.
  
  After foreclosure, the court might assume the previous owner inhabits the residential or commercial property. The brand-new owner can request a "writ of support" to get rid of the previous owner. This is various from a "writ of restitution," which eliminates occupants after a judgement of expulsion. When the constable arrives to eliminate the previous owner, they may discover the renter instead. Tenants have different rights than the previous owner who had a foreclosure action filed versus them. Only a writ of restitution approved by a judge or court commissioner after a judgment for expulsion licenses a sheriff to remove an occupant.
  
  You can describe the scenario to the court, sheriff, and new owner, and show them any important documents such as your lease and evidence of lease payments. You might likewise wish to call an attorney.
  
  Here is a detailed overview of the foreclosure procedure:
  
  1. The proprietor defaults on payment of a mortgage loan.
• A foreclosure action is filed in court by the bank.
• The landlord has a specified number of days to states a defense against the foreclosure filing.
• Once that duration is over, the court decides whether to accept or decline the defenses to the foreclosure. If the court rejects these defenses, they get in a judgment of foreclosure. NOTE: This is not the very same thing as selecting a brand-new owner.
• After the judgment of foreclosure, the property owner starts a "redemption duration" where they can pay back the amount owed to the bank. During this time, the landlord might treat the default or sell the residential or commercial property, ending the foreclosure and enabling the property manager to continue as owner. A redemption duration can be numerous months, depending on the type of foreclosure filed. NOTE: During the redemption period, the landlord still gathers rent and is accountable for repairs.
• Once the redemption duration ends, if the property owner hasn't repaid the money, there is a constable's sale where the residential or commercial property is offered to a new owner or (generally) to the bank that demanded foreclosure.
• Once a residential or commercial property is sold, a hearing is arranged to verify the sale.
• The verification of sale hearing happens and, if the sale is validated, results in the "date of verification sale." The title of the home is moved at the hearing. The brand-new owner may be happy to consent to a new lease, however that is not needed.
• The court might approve the new owner a "writ of assistance" in the confirmation of sale hearing in step # 8, which will permit the brand-new owner to go to the sheriff and have the previous owner gotten rid of if they reside in the residential or commercial property.
  
  More comprehensive details about foreclosure and the PFTA is offered in this Wisconsin Bar article.
  
  -- * The Tenant Resource Center is not a law office and our staff and volunteers do not provide legal guidance. Nothing on our website or other materials constitutes legal suggestions. For assistance finding an attorney, take a look at our attorney recommendation list.
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